India voids law that sought billions in retrospective taxes

India's government is repealing a hotly disputed tax law under which it pursued billions of dollars from international companies for past dealings

NEW DELHI -- India’s government is repealing a controversial tax law under which it pursued billions of dollars from international companies for their past dealings and hopes that scrapping the retrospective levy boosts investor confidence. The bill approved in Parliament’s upper house Monday proposes to withdraw tax demands made over indirect transfers of Indian assets prior to May 2012. It requires companies end their legal challenges over the old law and would refund the principal amount of any of the retrospective taxes the companies paid. The legislation will have to be signed by India’s ceremonial president, a formality before becoming law, and will only apply prospectively from May 2012. India's previous government added the retrospective tax, which taxes deals made before the law exists, in 2012 to claim tax from international investors that acquired assets of Indian companies.